As a component of the 2018-2019 New York Budget, a new payroll tax was introduced starting in calendar year 2019. This new, optional tax is known as the Employer Compensation Expense Tax (hereafter "ECET").
This new tax is paid on employee wages and compensation earned in New York in excess of $40,000 and the rate is 1.5% in 2019, 3% in 2020 and 5% in 2021 and thereafter.
Wait - why pay an optional tax??
Yes, this is an optional tax that you have to "opt-in" for filing. This means that you'll have to file quarterly tax returns (separate from the regular NY payroll tax returns) and will be subject to similar filing exposures (late filing penalties, costs of filing, etc.).
However, under the right set of circumstances, opting into this tax can generate tax savings, as well as a perk that is marketable to potential employees, further setting your company apart from its competition.
Here at CK, we're already ahead of this optional tax and can help you look at it from a high-level view point to see if opting in is the right choice for your business.
The deadline for opting in is December 1st, so please contact us as soon as possible to start the discussion.
We advise that you contact us quickly at 516-937-9500 to discuss the proper avenue to follow so that you do not leave your company open to exposure.